Excerpt from BALLY MFG. CORP. V. JS&A GROUP, INC. Ill.App.,410 N.E.2d 321 The information extracted is most likely to be of interest to Bally/Astrocade fans. There is plenty more information in the summary of the case, but much of it is difficult to understand and probably requires a law degree (I'm NOT exaggerating). Bally Manufacturing Corporation, a Delaware Corporation Vs. JS&A Group, Inc. Aug. 27, 1980 Overview Manufacturer of amusement devices sold to distributors and wholesale- retailers brought action seeking preliminary injunction restraining seller of same through mail orders from publishing "false or confusing" advertisements concerning manufacturer or its products, services or warranties. The Circuit Court, Cook County, Reginald J. Holzer, C. J., granted preliminary injunction and seller brought interlocutory appeal. The Appellate Court, McNamara, J., held that manufacturer was not entitled to preliminary injunctive relief under Uniform Deceptive Trade Practices Act where he failed to establish injury or likelihood of actual injury. Reversed. Summary On December 13, 1979, the trial court issued a temporary restraining order prohibiting JS&A from "publishing or circulating false advertisements regarding plaintiff or its products * * '." Thereafter JS&A filed an answer admitting placing of the two advertisements but denying their falsity or impropriety. The trial court then conducted a hearing upon Bally's request for preliminary injunction at which the following evidence was adduced. In 1977 JS&A purchased approximately 3,000 Bally Arcades from Bally for resale to the public. JS&A also purchased cartridges used in the operation of the devices. JS&A returned approximately 1,000 defective units to Bally. Upon receipt, Bally would replace the defective unit. Each unit was accompanied by a warranty card and owner's manual. The warranty listed the address, while the manual contained both the address and telephone number of the Bally Consumer Products Division. The "limited" warranty extended "to the original purchaser only" and provided that the unit would be free from defects in materials and workmanship for 90 days after purchase. After the 90 day period, Bally would replace all defective parts for one year with the customer incurring all labor costs. Mary Stanke, JS&A's executive vice-president, testified that in October 1979, JS&A had 400 Bally Arcades and 3,256 cartridges in its inventory. Of the 400 devices, 60 were broken and 340 were operational. Some of the units had been returned by customers after a trial period. According to Stanke, she had read the warranty provisions set forth on each card. On October 26, 1979, Stanke telephoned Joan Mason, a Bally manager, to determine to what extent the warranty would apply to the remaining units in JS&A's inventory. Joseph Sugarman, JS&A's president, also participated in the conversation. Both Stanke and Sugarman testified Mason informed them that all such units were covered by the warranty. Stanke testified that they explained to Mason that the 340 operational units were returned devices. On October 30, 1979, Stanke wrote Mason confirming the telephone conversation. In the letter, Stanke stated that she understood Bally would honor the warranty on the units in JS&A's warehouse, but that it would not repair any of the defective devices until JS&A settled its outstanding account, and that JS&A thus saw no alternative but to "dump" the merchandise on the retail market. Mason wrote back stating that during the telephone conversation, she had informed Sugarman that Bally would service according to the warranty, and that the warranty applied only to the original purchaser and not to any pre-owned or defective merchandise. Meanwhile, to liquidate its inventory of units and cartridges, JS&A placed an advertisement prepared by Sugarman in certain regional editions of the October 31, 1979, Wall Street Journal. The advertisement offered to sell the inventory of Bally Arcades for $49.95 per unit and continued: "We are liquidating our entire inventory of Bally Arcade programmable TV games * * *. Some units have slight scratches but all are fully operational. Some are new units, some were returned by customers during our 30-day trial period. Product comes with one-year limited warranty backed by Bally Corporation and four pistol grips. * * * You may also select from four cartridges regularly $20 to $25 each-but offered here at half price. * * * There are many other cartridges offered by Bally and we will supply you with Bally's address for future orders." Sugarman testified that after publication of this advertisement, Bally's counsel complained that the advertisement contained two errors: that the warranty did not cover all of the units offered for sale and that customers could not order cartridges directly from Bally. Bally requested a retraction. Sugarman stated that he was familiar with the warranty's terms, but that based on previous experience, he did not realize it extended only to the original purchaser. He was also aware that Bally did not sell its product directly to the general public. Yet, for a year, JS&A had, with Bally's knowledge, supplied Bally's address to customers who wished to order cartridges. Sugarman agreed that the portion of the advertisement concerning the availability of cartridges from Bally could be misleading. He testified, however, that the message intended to be conveyed was that customers could obtain from Bally the name of a dealer from whom cartridges could be purchased. JS&A did not believe that the advertisement contained errors but printed a retraction in order to avoid future problems. Stuart Goldblatt, director of special projects at JS&A, testified that in November, 1979, at Stanke's direction, he contacted Bally to ascertain its policy toward out-of-warranty merchandise. When he telephoned asking to speak to a Bally service manager, he was referred to a Mr. Schultz. Goldblatt identified himself as a consumer who owned a Bally unit which was not working properly. Schultz informed him that Bally would repair units not under warranty for $25 and tag on a 90 day limited warranty from the date of repair. Goldblatt did not identify himself as an employee of JS&A nor his purpose in seeking the information. He did not later verify the information received from Schultz. Based on the information received by Goldblatt, Sugarman prepared an advertisement entitled "Retraction" which appeared on December 3, 1979, in the same regional editions of the Wall Street Journal as be-fore. It read, in relevant part, as follows "FIRST ERROR The first error in our ad was our mentioning that 'We will supply you with Bally's address for future orders.' What we should have said was that 'Bally can give callers the names of its dealers who will have the additional cartridges that are not available from JS&A.' We trust this clarifies that situation. SECOND ERROR The second error concerned the warranty. We mentioned that the unit 'comes with a one year limited warranty backed by Bally Corporation and four pistol grips.' Obviously, the unit was not backed by four pistol grips but rather 'came with four pistol grips.' And secondly, Bally's lawyers told us that the warranty applied only to the original purchaser. THIRD ERROR If that wasn't bad enough, although the advertisement also mentioned that units were returned 'during our 30-day trial period,' there were units that were returned even beyond that period due to our lenient return policies. So even that was misstated. So here we were with a dilemma. With the FTC watching our every move and Bally Corporation's lawyers wanting us to print a retraction, we simply returned all our customers' checks and shipped our entire inventory of working Bally units, free of charge, to many of the customers who ordered the unit and all four cartridges. 60 DEFECTIVE UNITS But we had another dilemma. We had 60 units that were defective-product [sic] we couldn't repair and that Bally refused to repair under warranty. We'll offer our 60 Bally units for two cents each. Each unit looks like new, but when you plug one in, nothing happens. The units are not backed by Bally Corporation nor are they backed by four pistol grips. But they are cheap. If you do receive a unit, you can send it to Bally and for $25, they'll repair it for you and tag on a 90-day limited warranty on their repair job." Richard Schultz, Bally's product and sales trainer, testified that in November, 1979, he received telephone calls from customers asking about the warranty on the Bally Arcade. He did not recall receiving an inquiry with respect to repairs on an out-of-warranty unit. Schultz never spoke to anyone named Goldblatt. Robert E. Wiles, general manager of Bally's Consumer Products Division, testified that Bally sold its product to distributors and wholesalers rather than to the general public. Bally did deal directly, however, with members of the public concerning re-pairs. Bally did not issue a 90 day tag-on warranty for $25 for any repaired unit. Such a claim in the second advertisement was erroneous. Wiles testified that after the first advertisement, Bally received numerous telephone calls from its distributors throughout the country. The calls prompted Wiles to issue a memorandum affirming that Bally's warranty policies remained as printed and that its channels of distribution were unchanged. Bally also responded to a number of calls and letters from purchasers of the units offered by JS&A requesting manuals and information about the warranty. Such inquiries continued after the second advertisement. Following the two advertisements, JS&A received orders for all the Bally Arcades offered for sale. Approximately 3,000 cartridges remained in its inventory. Sugar-man had been in the process of preparing another advertisement regarding Bally's products to be run before Christmas. Due to the temporary restraining order, the advertisement was not published. On December 21, 1979, the trial court granted a preliminary injunction restraining JS&A from "issuing false or confusing advertising regarding [plaintiff] or its products, services, or warranties."